SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 2)

FILED BY REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ][X] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-B(E)14A-6(E)(2))
[X][ ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO 240.14A-11(C) OR 240.14A-12

PIZZA INN, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] NO FEE REQUIRED.

[ ] FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14A-6(I)(1) AND 0-11.
1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION APPLIES:
2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FOR THE AMOUNT ON WHICH THE
FILING FEE IS CALCULATED AND STATE HOW IT WAS DETERMINED):
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
5) TOTAL FEE PAID:

[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE 0-11(A)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING
FEE WAS PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION
STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID:
2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO:
3) FILING PARTY:
4) DATE FILED:

PIZZA INN, INC.
3551 PLANO PARKWAY
THE COLONY, TEXAS 75056
(469) 384-5000

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD DECEMBER 18, 2002FEBRUARY 11, 2004

To our Shareholders:

The Annual Meeting of Shareholders of Pizza Inn, Inc. (the "Company") will
be held at the Company's corporate offices, 3551 Plano Parkway, The Colony,
Texas 75056, on Wednesday, December 18, 2002,February 11, 2004, at 10:11:00 a.m., Dallas time, for
the following purposes:

1. To elect fourthree Class III directors; and

2. To transact such other business as may properly come before the meeting
or any adjournments thereof.

On October 27, 2003, the Company received a notice from Newcastle Partners,
L.P. ("Newcastle") that it intends to (1) nominate a competing slate of
directors at the Annual Meeting, (2) present at the Annual Meeting proposals to
repeal certain of the amendments to the Company's bylaws adopted by the Board of
Directors on December 18, 2002 (the "Bylaw Amendments") and (3) seek approval to
have all of its expenses incurred in connection with any proxy or other
solicitation materials reimbursed by the Company. Newcastle has also advised the
Company that it intends to solicit shareholders through a proxy statement.

THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF ITS NOMINEES ON THE
ENCLOSED WHITE PROXY CARD. THE BOARD FURTHER RECOMMENDS THAT YOU REJECT ANY
PROXY SOLICITATION BY NEWCASTLE AND THAT YOU VOTE "AGAINST" NEWCASTLE'S
PROPOSALS TO REPEAL THE BYLAW AMENDMENTS AND TO SEEK REIMBURSEMENT FOR ITS PROXY
SOLICITATION EXPENSES, IF SUCH PROPOSALS ARE PRESENTED AT THE ANNUAL MEETING. WE
URGE YOU TO VOTE "FOR" THE BOARD'S NOMINEES NAMED IN THIS PROXY STATEMENT AND
NOT TO EXECUTE ANY PROXY CARD SENT TO YOU BY NEWCASTLE.

Only shareholders of record at the close of business on October 19, 2002December 31, 2003 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof.

By Order of the Board of Directors,

Rod J. McDonaldB. Keith Clark
Secretary

November 5, 2002January , 2004

THIS ANNUAL MEETING IS OF PARTICULAR IMPORTANCE TO ALL SHAREHOLDERS OF THE
COMPANY BECAUSE OF THE ATTEMPT BY NEWCASTLE TO TAKE OVER YOUR BOARD. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED WHITE PROXY CARD, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED FOR
YOUR CONVENIENCE. THE ENCLOSED WHITE PROXY CARD IS REVOCABLE AT ANY TIME PRIOR
TO ITS USE.

YOUR VOTE IS IMPORTANT.

PIZZA INN, INC.
3551 PLANO PARKWAY
THE COLONY, TEXAS 75056
(469) 384-5000

PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD DECEMBER 18, 2002FEBRUARY 11, 2004

The Board of Directors of Pizza Inn, Inc., a Missouri corporation (the
"Company"), is soliciting proxies to be voted at the Annual Meeting of
Shareholders (the "Annual Meeting") to be held at the Company's corporate
offices, 3551 Plano Parkway, The Colony, Texas 75056, on Wednesday, December 18,
2002, 10:February 11,
2004, 11:00 a.m., Dallas time, and at any adjournments thereof. This Proxy
Statement and the enclosed form of proxy were first mailed to the Company's
shareholders on or about November 5, 2002.January , 2004.

If the enclosed WHITE proxy card is signed and returned before the Annual
Meeting, it will be voted in accordance with the directions on the proxy. A
proxy may be revoked at any time before it is voted by execution of a subsequent
proxy, by signed written notice to Pizza Inn, Inc., c/o American Stock Transfer,
59 Maiden Lane, New York, NY 10007, or by voting in person at the Annual
Meeting.

OUTSTANDING CAPITAL STOCK

The record date for shareholders entitled to notice of, and to vote at, the
Annual Meeting is October 19, 2002.December 31, 2003. At the close of business on that date,
there were outstanding 10,058,32410,073,674 shares of Common Stock, $.01 par value per
share ("Common Stock"). No other class of securities of the Company is entitled
to notice of, or to vote at, the Annual Meeting.

ACTION TO BE TAKEN AT THE MEETING

The accompanying WHITE proxy card, unless the shareholder otherwise
specifies in the proxy, will be voted:
1. FOR the election of the fourthree Class III director nominees named herein, to
serve for a term of two years each or until their respective successors are
elected and qualified;

2. AGAINST the repeal of certain of the amendments to the Company's bylaws
adopted by the Board of Directors on December 18, 2002, if Newcastle Partners,
L.P. ("Newcastle") presents a proposal at the Annual Meeting to repeal those
amendments;

3. AGAINST the reimbursement by the Company of costs and 2.expenses (including
any litigation expenses) incurred by Newcastle in connection with its
solicitation of proxies in connection with this Annual Meeting, if Newcastle
presents a proposal at the Annual Meeting for the Company to reimburse such
costs and expenses and/or to recommend to the Board of Directors that the
Company reimburse Newcastle for such expenses; and

4. In the discretion of the proxy holders, as to the transaction of such
other business as may properly come before the meeting or any adjournments
thereof.

The Board of Directors is not presently aware of any other business to be
brought before the Annual Meeting.

QUORUM AND VOTING

The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. In deciding all questions, a holder of Common Stock (a
"Shareholder") is entitled to one vote, in person or by proxy, for each share
held in his name on the record date. Cumulative voting for the election of
directors is not permitted. Thus, a Shareholder is not entitled to cumulate his
votes and cast them all for any single nominee or to spread his votes, so
cumulated, among more than one nominee. Directors must be elected by a
plurality of the votes cast. To be elected as a director, a candidate must be
one of the fourthree candidates who receive the most votes out of all votes cast at
the Annual Meeting. With respect to all other matters voted on at the Annual
Meeting, the affirmative vote of the holders of a majority of the shares
present, in person or by proxy, at the Annual Meeting will be required for
passage.

A Shareholder who is present, in person or by proxy, and who withholds his
vote in the election of directors, will be counted for purposes of determining
whether a quorum exists, but the withholding of his vote will not affect the
election of directors. A Shareholder who is present, in person or by proxy, and
who abstains from voting on other proposals, will be counted for purposes of a
quorum, and the abstention will have the same effect as a vote against the
proposals. Broker non-votes will be considered shares present and counted for
purposes of determining whether a quorum exists if voting instructions are given
as to at least one of the matters to be voted on; however, the presence of such
shares will have no effect on the outcome of the vote. If a quorum is not
present, in person or by proxy, the meeting may adjourn from time to time until
a quorum is obtained.

TheWith respect to the election of directors, the enclosed WHITE proxy card,
if executed and returned, will be voted as directed on the proxy or, in the
absence of such direction, FOR the election of the nominees named on the WHITE
proxy card as directors. The proxy holders will not cumulate votes. If any other matters
properly come before the meeting, the enclosed proxy will be voted by the proxy
holders in accordance with their best judgment. The Board believes that all the nominees will be
available to serve as directors. If any nominee is unable to serve, the Board
may decide to do one of two things. The Board may recommend a substitute
nominee, or the Board may fill the vacancy later. The shares represented by all
valid proxies may be voted for the election of a substitute if one is nominated.

On October 27, 2003, the Company received a notice from Newcastle Partners, L.P.
("Newcastle") that it intends to (1) nominate a competing slate of directors at
the Annual Meeting, (2) present at the Annual Meeting proposals to repeal the
Bylaw Amendments and (3) seek approval to have all of its expenses incurred in
connection with any proxy or other solicitation materials reimbursed by the
Company. If Newcastle presents the proposals mentioned above at the Annual
Meeting, the enclosed WHITE proxy card, if executed and returned, will be voted
as directed on the proxy or, in the absence of such direction, AGAINST such
proposals.

If any other matters properly come before the meeting, the enclosed proxy will
be voted by the proxy holders in accordance with their best judgment.

THE PROXY CONTEST

As of November 15, 2003, Newcastle was the beneficial owner of 3,583,780
shares of the Company's Common Stock, which represents over 35% of the issued
and outstanding Common Stock of the Company. The majority of these shares were
purchased pursuant to an option granted in December 2002 to Newcastle by Mr. C.
Jeffrey Rogers, the Company's former Chief Executive Officer. Pursuant to an
agreement with the Company entered into at the time Newcastle acquired the
shares from Mr. Rogers, the Board of Directors was required to appoint a
representative of Newcastle to each class of directors of the Company. On
December 19, 2002, Mark E. Schwarz and Steven J. Pully were appointed to serve
as Newcastle's representatives on the Board of Directors in accordance with the
Company's agreement with Newcastle.

At the meeting of the Board of Directors on August 26, 2003, the Nominating
and Corporate Governance Committee requested that the Board approve its
recommendation to re-nominate all of the existing directors whose terms would
expire at the upcoming annual meeting. Mr. Schwarz stated that he had been
interviewing potential director nominees for the Board to consider, but had not
yet finished his interview process. At Mr. Schwarz's request, the Board of
Directors deferred the nomination process until the next regularly scheduled
Board meeting on October 14, 2003.

On October 13, 2003, the Board received a memorandum from Mr. Schwarz listing 18
potential candidates for the Board to consider nominating for election at the
annual meeting. At the October 14, 2003 Board meeting, Mr. Schwarz stated that
he had asked Mr. Taylor and Mr. Ungerman to step down from the Board of
Directors and that two new persons should be nominated to replace them. The
other members of the Board inquired as to whether Mr. Schwarz had specific
nominees for the Board to consider. Mr. Schwarz stated that he had not yet
finished his interview process and that he did not have any specific
recommendations for the Board at that time.

During the October 14, 2003 meeting, the Board of Directors determined that it
needed to make a decision as to the nominees for the annual meeting due to the
October 27, 2003 deadline for filing the Company's proxy statement. The
Company's proxy statement was due 120 days after its fiscal year ended on June
28, 2003. The members of the Nominating and Corporate Governance Committee again
proposed that all three existing directors whose terms were expiring should be
re-nominated. The Board members discussed that the experience, qualifications
and familiarity with the Company's business made the existing directors valued
members of the Board. The Board also took into consideration the fact that Mr.
Schwarz was not prepared at that time to make any specific recommendation to the
Board. The Board voted to re-nominate all three existing directors who were up
for re-election, with Mr. Schwarz and Mr. Pully voting against the proposal.

On October 27, 2003, the Company received a letter from Newcastle stating its
intent to nominate Steven J. Pully, Barry M. Barron, Sr., and Robert B. Page to
the Board of Directors of the Company at the Annual Meeting and to solicit
proxies from shareholders with respect to the election of its nominees.

On November 7, 2003, the Company received a subsequent letter from
Newcastle stating that it intended to substitute Ramon D. Phillips for Robert B.
Page as one of its nominees for election at the Annual Meeting.

On November 10, 2003, the Board of Directors held two meetings and
discussed, among other things, certain matters related to the proposed director
nominations. At that time, the Board of Directors postponed the Annual Meeting
until January 21, 2004 in order to permit the Board and Newcastle additional
time to discuss the nominees to be proposed by the Board of Directors at the
Annual Meeting and to evaluate additional information regarding whether the
election of two new directors proposed by Newcastle could cause a "Change of
Control" as defined in the employment agreements between the Company and each of
Ronald W. Parker, B. Keith Clark, Ward T. Olgreen and Shawn M. Preator, as
discussed below.

On November 11, 2003, the Company received a subsequent letter from
Newcastle stating that it intends to substitute Robert B. Page for Barry M.
Barron, Sr. as one of its nominees for election at the Annual Meeting.

On November 16, 2003, the Board of Directors met and further discussed the
"Change of Control" issue and Newcastle's desire for two additional Board seats.

On December 4, 2003, Newcastle presented a proposal regarding a resolution
of its dispute with the Company regarding the proxy contest threatened by
Newcastle. As proposed by Newcastle, it would withdraw its alternative slate of
directors and support a mutually agreed slate of directors under the following
conditions:

(i) Mr. Page would be presented on the Company slate for election to the
Board, one of each of Messrs. Schwarz, Pully or Page would be appointed to each
Board committee, and Mr. Pully would be named Chairman of the Board;
(ii) the Board of Directors would designate each of Messrs. Schwarz, Pully
and Page as an incumbent director as defined in the Company's existing executive
employment contracts, and each employee with a contract would waive the Change
of Control provision with regards to these three individuals;
(iii) the Board will repeal the bylaw amendments adopted on December 18,
2002, agree not to change the bylaws or the employment contracts before the
January 21, 2004 meeting, and agree that any future changes to the Company's
bylaws or the existing executive employment contracts can only be approved by a
supermajority vote of five of the seven directors; and
(iv) the Company will reimburse Newcastle for all its legal and travel
expenses related to these negotiations and its threatened proxy contest, which
expenses are currently undetermined.

After review and discussion by the five non-Newcastle directors (the
"Existing Directors"), a counter proposal was submitted to Newcastle on December
8, 2003. Following the points as listed above, the Existing Directors responded
as followings:

(i) the Existing Directors are not opposed to including Mr. Page on the
Company slate or the committee representation request, but believe that the
Chairman of the Board should continue to be elected on an annual basis by a
majority of the Board of Directors;
(ii) the Board of Directors does not have the ability to designate a
director as incumbent as defined in the Company's executive employment contracts
and the individual employees have not agreed to waive the Change of Control
provision;
(iii) the Existing Directors are not opposed to revising the relevant
sections of the bylaws in a manner to be agreed upon with Newcastle, but are
opposed to a supermajority voting requirement;
(iv) the Company and Newcastle will agree to bear their own legal and travel
expenses.

The Board of Directors was unable to reach a mutually agreeable compromise on
these issues.

On January 6, 2004, the Board of Directors met and voted to postpone the Annual
Meeting until February 11, 2004 to allow sufficient time for all shareholders to
receive and consider the Company's proxy solicitation materials and to vote
prior to the Annual Meeting.

The Board of Directors opposes the election of Messrs. Phillips and Page to
the Board of Directors. Although Mr. Page was among the candidates listed in the
memorandum provided by Mr. Schwarz to the Board of Directors on October 13,
2003, he was not discussed at the October 14, 2003 meeting. In addition, he has
not been discussed at subsequent Board meetings, none of the non-Newcastle
representatives of the Board have spoken with Mr. Page and, therefore, the Board
of Directors has not had an adequate opportunity to assess his qualifications.
From the receipt of the October 13, 2003 candidate memorandum to the October 27,
2003 filing date, there was not sufficient time to contact and adequately assess
the qualifications of 18 potential candidates. In addition, Mr. Page was not
identified by Newcastle as one of its director designees until October 27, 2003.
A scheduled meeting between Mr. Page and Mr. Parker in October was cancelled by
Newcastle. Mr. Page was not discussed at the Company's two November 10, 2003
meetings discussed above because Mr. Page had been removed by Newcastle as one
of its director designees. Furthermore, the Board believes that the existing
directors will be better able to serve the interests of the shareholders of the
Company based on their experience, qualifications and familiarity with the
Company's business.

The employment agreements for each of Mr. Ronald Parker, Mr. Keith Clark,
Mr. Shawn Preator and Mr. Ward Olgreen provide that that if the employment of
any of these executive officers were to terminate for any reason (including the
voluntary termination of employment by such officer) within 12 months after a
"Change of Control", the Company would be required to make a lump sum payment to
the officer in the following amounts: $5.4 million to Mr. Parker, $762,000 to
Mr. Clark, $630,000 to Mr. Olgreen and $597,000 to Mr. Preator. The aggregate
of these payments for which the Company would be obligated to pay is
approximately $7.4 million. Such amounts include tax gross-up payments as a
result of excise taxes that such persons would be required to pay due to such
payments being deemed to be "excess parachute payments" under the Internal
Revenue Code. Of this amount, approximately $3.3 million of the amount paid to
Mr. Parker, $451,000 of the amount paid to Mr. Clark, $362,000 of the amount
paid to Mr. Olgreen and $369,000 of the amount paid to Mr. Preator would not be
deductible by the Company for federal income tax purposes.

In addition, if Mr. Parker were no longer the Chief Executive Officer of the
Company, the Company would be in default under approximately $9.5 million of
indebtedness owed to Wells Fargo Bank (Texas). Additionally, the Company's
interest rate swap agreement will be in default, and as of September 28, 2003,
the payoff amount was approximately $800,000.

Under each of the employment agreements, a "Change of Control" is deemed to have
occurred if "individuals who, as of [December 16, 2002], constitute[d] the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to [December 16, 2002] whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange
Act of 1934) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board."

Counsel to the Company has delivered to the Board its written legal
opinion that, subject to the assumptions, limitations, qualifications and
exceptions contained therein, it is of the opinion that a Texas court in a
properly presented and argued case should conclude that Messrs. Schwarz, Pully,
Phillips and Page would not constitute members of the Incumbent Board and
therefore, if the Newcastle nominees are elected to the Board in connection with
a proxy contest, a "Change of Control" as defined in the employment agreements
discussed above would be deemed to occur. The opinion of counsel is based upon
certain assumptions, limitations, qualifications and exceptions, including a
certificate from the Company setting forth the factual background of the
Company's relationship with Messrs. Schwarz and Pully, and specifically, the
circumstances surrounding the appointment of Messrs. Schwarz and Pully to the
Board in December 2002. The opinion of counsel also notes the absence of legal
precedent concerning the matters covered by the opinion and states that there is
no assurance that a Texas court would agree with counsel's interpretation of
such matters. Counsel for Newcastle has informed counsel to the Company that
they disagree with this opinion. Additionally, Messrs. Schwarz and Pully have
informed the Board that they believe themselves to be incumbent directors.

The Board of Directors and management believe that electing Messrs.
Phillips and Page (or Mr. Barron) to the Board of Directors is contrary to the
best interests of the Company's shareholders. The Board of Directors recommends
that you reject Newcastle's nominees and vote FOR the Board's nominees on the
enclosed WHITE proxy card. WE URGE YOU NOT TO EXECUTE ANY PROXY CARD SENT TO
YOU BY NEWCASTLE.

PROPOSAL ONE:

ELECTION OF DIRECTORS

The Company's Restated Articles of Incorporation and By-Laws provide that
the Board of Directors shall be divided into two Classes. Currently, a former
Board member holds one additional Board seat in a non-voting advisory capacity.
The advisory position is not elected, but may be appointed from time to time by
vote of the Board of Directors for a period of time as approved by the Board.
The terms of the fourthree Class III directors expire at the Annual Meeting. The
Board has nominated for election at the Annual Meeting all of the incumbent
Class III directors. Each nominated director will serve for a term of two years.
Each nominee of the Board has expressed his intention to serve the entire term
for which election is sought. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR"FOR"
EACH OF THE FOURTHREE NOMINEE DIRECTORS.DIRECTORS LISTED BELOW.

The following table lists the names and ages, as of October 1, 2002,November 15, 2003, of the
fourthree nominee directors, the threefour Class I directors whose terms of office will
continue after the Annual Meeting, the advisory director, the class to which
each director has been or will be elected, the year in which each director was
first elected, and the annual meeting (assuming that it is held in December) at
which the term of each director will expire.

Director Term
Nominee Directors Age Class Since Expires
- ------------------ --- ----- ----- -------
Bobby L. Clairday 59 I 1990 2002
Ronald W. Parker 52 I 1993 2002
Ramon D. Phillips 69 I 1990 2002
Butler E. Powell 63 I 1998 2002

Continuing Directors
---------------------
Steve A. Ungerman 5859 II 1990 2003
F. Jay Taylor 7980 II 1994 2003
B. Keith Clark 39Steven J. Pully 43 II 2002 2003

Continuing Directors
- ---------------------
Bobby L. Clairday 60 I 1990 2004
Ronald W. Parker 53 I 1993 2004
Butler E. Powell 65 I 1998 2004
Mark E. Schwarz 43 I 2002 2004

Advisory Director
- ------------------
Ramon D. Phillips (a) 70 n/a 2002 n/a

(a) Mr. Phillips previously served as a Class I Director from 1990
through 2002. The position of Advisory Director is subject to Board discretion.

EXECUTIVE OFFICERS

The following table sets forth certain information, as of October 1, 2002,November 15, 2003,
regarding the Company's executive officers:
Executive
Officer
Name Age Position Since
- ---- --- -------- -----
Ronald W. Parker 5253 President and Chief Executive Officer 1992

B. Keith Clark 3941 Senior Vice PresidentPresident- Corporate Development,
Secretary and General Counsel 1997

Ward T. Olgreen 4344 Senior Vice President of Franchise Operations
and Concept Development 1995

Shawn M. Preator 3334 Chief Financial Officer and Vice President of
Finance, Treasurer, and
Assistant SecretaryDistribution 1999

Barry L. Hill 41Danny K. Meisenheimer 43 Vice President of Training 2002

Brian L. Waters 51 Vice President of Purchasing - Norco Division 2000Marketing 2003

Michael L. Iglesias 4142 Vice President of Franchise Development 2001

James D. Shoemake 3536 Vice President of Franchise Services 2002

Barry L. Hill 42 Vice President of Training 2002

Brian L. Waters 52 Vice President of Purchasing - Norco
Division 2000

Susan A. Milliman 3738 Vice President of Recruiting and Employee
Services 2001

BIOGRAPHIES OF NOMINEE DIRECTORS, AND CONTINUING DIRECTORS, AND ADVISORY DIRECTOR

Bobby L. Clairday is an Area Developer of Pizza Inn restaurants and he is
President, a Director and sole shareholder of Clairday Food Services, Inc., a
Pizza Inn franchisee operating Pizza Inn restaurants in Arkansas. Mr. Clairday
is also sole shareholder of Advance Food Services, Inc., a franchisee operating
Pizza Inn restaurants in Arkansas. From 1990 until his election as a Director
of the Company in January 1993, Mr. Clairday was an ex-officio member of the
Board of Directors, serving as a representative of our franchisees. He has
served as the President of the Pizza Inn Franchisee Association and as a member
of various committees and associations affiliated with the Pizza Inn restaurant
system. Mr. Clairday has been a franchisee of the Company for over twenty years
and a member of the Board for over nine years.

Steve A. Ungerman is a practicing attorney in Dallas, Texas. From January
1, 1998 through December 31, 2000 he was Of Counsel to the law firm of Boswell &
Kober, P.C. From August 1997 to December 1997, he was employed by MedSynergies,
Inc., a physician practice management company, in the capacity of Special
Projects. From September 1996 to August 1997, he was President of MedSynergies,
Inc. From September 1996 to December 1997, he was Of Counsel to the law firm of
Ungerman, Sweet & Brousseau. Prior to September 1996, he practiced law as a
shareholder of Ungerman & Ungerman, P.C. and its predecessors for 28 years in
the areas of business matters, commercial finance and mediation. Mr. Ungerman
received his Juris Doctor degree from Southern Methodist University. He was
elected a Director and Chairman of the Board of Directors of the Company in
September 1990.

Ronald W. Parker was appointed President and Chief Executive Officer of the
Company in August 2002. Mr. Parker joined the Company in October 1992 and was
elected Executive Vice President, Chief Operating Officer, and a Director in
January 1993. He was appointed President in July 2000. From October 1989 to
September 1992, he was Executive Vice President and General Manager of the
Bonanza restaurant division of Metromedia Steakhouses, Inc. and its predecessor
Metsa, Inc. From 1983 to 1989, Mr. Parker served in several executive positions
for USACafes, the franchisor of the Bonanza restaurant chain. From 1974 to 1983,
Mr. Parker served in several executive positions with Chart House, Inc., a
restaurant company with more than 600 units of various brands. He previously
worked with a national accounting firm from 1972 to 1974. Mr. Parker also
currently serves on the Board of Directors of the Cotton Bowl Athletic
Association, the Mississippi State University Foundation, and the Mississippi
State University Bulldog Club, Inc. Foundation. MrMr. Parker was previously on the
Board of Directors of the Mississippi State University Alumni Association.

Ramon D. Phillips is the former Chairman of the Board, President and Chief
Executive Officer of Hallmark Financial Services, Inc., a financial services
company. He served as Chairman, President, and Chief Executive Officer of
Hallmark from 1989 through 2000, and as Chairman through August 2001. Prior to
Hallmark, Mr. Phillips had over fifteen years experience in the franchise
restaurant industry, serving in an executive position with Kentucky Fried
Chicken (1969-1974) and Pizza Inn, Inc. (1974-1989). He was elected a Director
of the Company in 1990.

Butler E. Powell is Vice President of Business Banking with Hibernia
National Bank in Metairie, Louisiana. He has served in various capacities with
the bank and its predecessors since 1983. He graduated from Loyola University
in New Orleans with BBA and MBA degrees and spent 3 1/2 years with the national
accounting firm Ernst and Ernst before entering the banking industry. Mr. Powell
was former President and a Director of the New Orleans Athletic Club and served
on the Foundation Board of East Jefferson Hospital. He was elected a Director of
the Company in January 1998.

Steven J. Pully is the President of Newcastle Capital Management, L.P., a
private investment management firm that is the general partner of Newcastle
Partners, L.P. Mr. Pully is also a director and officer of Geoworks Corporation,
a director of Max-Worldwide, Inc. and a director and Chief Executive Officer of
privately-held Pinnacle Frames and Accents, Inc. Prior to joining Newcastle
Capital Management, L.P. in late 2001, from May 2000 to December 2001, he was a
managing director in the mergers and acquisitions department of Banc of America
Securities and from January 1997 to May 2000 he was a senior managing director
at Bear Stearns. Prior to becoming an investment banker, Mr. Pully practiced
securities and corporate law at the law firm Baker & Botts. Mr. Pully is a CPA
and a member of the Texas Bar. Mr. Pully was appointed a Director in December
2002 to fill a vacant Class II Board seat.

Mark E. Schwarz is the Chairman, Chief Executive Officer and Portfolio Manager
of Newcastle Capital Management, L.P., a private investment management firm he
founded in 1992 that is the general partner of Newcastle Partners, L.P. Mr.
Schwarz is Chairman of the Board and Chief Executive Officer of Hallmark
Financial Services, Inc., a director and Chief Executive Officer of Geoworks
Corporation and a director of Bell Industries, Inc., Nashua Corporation, S L
Industries and Web Financial Corporation. From 1995 through 1999, he was also a
Vice President of Sandera Capital Management and in 1998 and 1999 he was a
director of Aydin Corporation. Mr. Schwarz was appointed a Director in December
2002 to fill a vacant Class I Board seat.

F. Jay Taylor is an arbitrator in Ruston, Louisiana who is affiliated with the
American Arbitration Association and the Federal Mediation and Conciliation
Service. He formerly served as a Director of USACafes, Earth Resources, and Mid
South Railroad. He was elected a director of First Guaranty Bank in 2001. Dr.
Taylor, who received his Ph.D. from Tulane University, served as President of
Louisiana Tech University from 1962 to 1987 and currently serves as its
President Emeritus. Mr. Taylor was elected a Director of the Company in 1994.

Steve A. Ungerman is a practicing attorney in Dallas, Texas. From January 1,
1998 through December 31, 2000 he was Of Counsel to the law firm of Boswell &
Kober, P.C. From August 1997 to December 1997, he was employed by MedSynergies,
Inc., a physician practice management company, in the capacity of Special
Projects. From September 1996 to August 1997, he was President of MedSynergies,
Inc. From September 1996 to December 1997, he was Of Counsel to the law firm of
Ungerman, Sweet & Brousseau. Prior to September 1996, he practiced law as a
shareholder of Ungerman & Ungerman, P.C. and its predecessors for 28 years in
the areas of business matters, commercial finance and mediation. Mr. Ungerman
received his Juris Doctor degree from Southern Methodist University. He was
elected a Director and Chairman of the Board of Directors of the Company in
September 1990.

BIOGRAPHIES OF NON-DIRECTOR OFFICERS

B. Keith Clark was appointed Senior Vice President- Corporate Development
in October 2002. He joined the Company in February 1997 and was elected General
Counsel and Secretary of the Company in March 1997. From June 1994 through
February 1997, he was Assistant General Counsel and Assistant Secretary of
American Eagle Group, Inc., a property and casualty insurance holding company.
From January 1990 through May 1994, Mr. Clark was a corporate associate in the
Dallas office of Akin, Gump, Strauss, Hauer & Feld, L.L.P., a diversified
international law firm. Mr. Clark was appointed a Directorserved on the Company's Board of the Company inDirectors
from September 2002 through December 2002. Since 1999 Mr. Clark has been a
member of the Board of Directors of the Visiting Nurse Association of Texas, since 1999 anda
non-profit corporation providing a variety of home health care services, where
he currently serves as Vice-ChairmanChairman of the Board.

BIOGRAPHIES OF NON-DIRECTOR OFFICERS

Michael L. Iglesias was appointed Vice President of Franchise Development
in May 2001. From May 1996 through May 2001, he was Director of Franchise
Development for the Company. Prior to joining the Company, Mr. Iglesias was an
Area Sales Representative for TCBY Systems, Inc.

Ward T. Olgreen was appointed Senior Vice President of Franchise Operations and
Concept Development in July 2000.December 2002. He was appointed Vice President of Concept
Development in February 1999.1999, and Senior Vice President of Concept Development
in July 2000. He joined the Company in September 1991 and served in a variety
of operational positions until his appointment in January 1995 as Vice President
of International Operations and Brand R& D. Mr. Olgreen was a Branch Manager
for GCS Service, Inc., a restaurant equipment service provider, from June 1986
through July 1991.

Shawn M. Preator was appointed Chief Financial Officer and Vice President of
Distribution in October 2002. He was elected Vice President in June 2000. He
was elected Controller, Treasurer, and Assistant Secretary in April 1999. Mr.
Preator had been Assistant Controller for the Company since July 1998. Prior to
joining the Company, Mr. Preator was a Senior Financial Analyst at LSG/Sky
Chefs, an international airline caterer, from September 1996 to July 1998.
Prior to September 1996, Mr. Preator worked for the accounting firm Ernst &
Young LLP in its audit department.

Danny K. Meisenheimer was appointed Vice President of Marketing in January 2003
after joining the Company in December 2002. Prior to joining the Company, Mr.
Meisenheimer served as Vice President of Marketing for Furr's Restaurant Group
since 1995. Mr. Meisenheimer joined the Marketing Department of Furr's in 1991.

Michael L. Iglesias was appointed Vice President of Franchise Development in May
2001. From May 1996 through May 2001, he was Director of Franchise Development
for the Company. Prior to joining the Company, Mr. Iglesias was an Area Sales
Representative for TCBY Systems, Inc.

James D. Shoemake was appointed Vice President of Franchise Services in May
2002. Mr. Shoemake had been Division Vice President of Traditional Operations
since 2000. He joined the Company in 1997 as a Franchise Operations Consultant.
Prior to joining the Company, Mr. Shoemake was an International Business
Consultant for European and Asian Markets for Brice Group, Inc.

Barry L. Hill was appointed Vice President of Training in May 2002. Mr.
Hill had been Director of Field Training and New Store Opening for the Company
since 1999. He joined the Company in 1998 as Training Manager. Prior to joining
the Company, Mr. Hill was Director of Training for Whataburger for 15 years.

Brian L. Waters was appointed Vice President of Purchasing - Norco Division in
September 2000. He joined the Company in August 1996 as Director of Purchasing.
Prior to joining the Company, Mr. Waters was Senior Purchasing Manager for Fast
Food Merchandisers from 1993 to 1996.

Susan A. Milliman was appointed Vice President of Recruiting and Employee
Services in July 2001. Ms. Milliman had been Director of Human Resources for the
Company since 1996. Prior to joining the Company, Ms. Milliman was a Human
Resources Generalist for Claim Services Resource Group.

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information, as of October 1, 2002,November 15,
2003, with respect to the beneficial ownership of Common Stock by: (a) each
person known to be a beneficial owner of more than five percent of the
outstanding Common Stock; (b) each director, nominee director, and executive
officer named in the section entitled "Summary Compensation Table"; and (c) all
directors and executive officers as a group (14(17 persons). Except as otherwise
indicated, each of the persons named in the table below is believed by the
Company to possess sole voting and investment power with respect to the shares
of Common Stock beneficially owned by such person. Information as to the
beneficial ownership of Common Stock by directors and executive officers of the
Company has been furnished by the respective directors and executive officers.

Name Shares Percent
and Address of Beneficially of Class
--------
5% Beneficial Owner Owned
- ------------------- -------- -----

C. Jeffrey Rogers (a)
5529 St. Andrews Ct
Plano, Texas 75093 3,650,790 34.60%

Wells Fargo & Company (a) (a)

Newcastle Partners, L.P.
Newcastle Capital Management, L.P.
Newcastle Capital Group, L.L.C. (b)
420 Montgomery Street
San Francisco, CA 94104 2,908,239 28.90%300 Crescent Court, Ste. 1110
Dallas, TX 75201 3,583,780 35.610%

Ronald W. Parker (c)
3551 Plano Parkway
The Colony, TX 75056 1,266,985 12.01%1,018,173 9.875%

Steve A. Ungerman (c)(d) 37,34930,566 Less than 1%
Butler E. Powell (c) 23,00035,000 Less than 1%
Bobby L. Clairday (e) 52,07248,900 Less than 1%
Ramon D. Phillips (c)(f) 60,543 Less than 1%Steven J. Pully (b) -0- -0-
Mark E. Schwarz (b) 3,593,780 35.693%
F. Jay Taylor (c) 20,000 Less than 1%
B. Keith Clark (c)(g) 145,209 1.43%(f) 168,486 1.660%
Ward T. Olgreen (c) 136,597 1.35%167,739 1.653%
Shawn M. Preator (c) 51,69353,918 Less than 1%
Danny K. Meisenheimer 287 Less than 1%

All Directors and
Executive Officers as a
Group (h) 1,868,714 18.58%(g) 5,250,661 52.170 %

(a) Voting rights for 2,905,000 shares directly held by Mr. Rogers are held
by Wells Fargo & Company pursuant towas a Loan AgreementDirector and Pledge Agreement
entered into betweenthe Company's Chief Executive Officer
until August 21, 2002. For additional information, see "Severance Agreement".
On August 21, 2002, Mr. Rogers and Wells Fargo Bank (Texas), N.A., an indirect
whollybeneficially owned subsidiary of Wells Fargo & Company, on June 2, 1997. See the
descriptionapproximately 3,650,000
shares, or approximately 35% of the Loan Agreementtotal shares then outstanding. On January 3,
2003, Mr. Rogers filed with the Securities Exchange Commission a Form 4
Statement of Changes in Beneficial Ownership showing ownership of 205,000
shares, or approximately 2% of the total shares then outstanding. The Company
cannot confirm subsequent changes, if any, in Mr. Rogers' ownership position.

(b) Newcastle Capital Management, L.P. is the general partner of Newcastle
Partners, L.P., Newcastle Capital Group, L.L.C. is the general partner of
Newcastle Management, L.P., and Pledge Agreement below for additional
information. SharesMark E. Schwarz is the managing partner of
Newcastle Partners, L.P. Accordingly, each of Newcastle Management, L.P.,
Newcastle Group, L.L.C., and Mark E. Schwarz may be deemed to beneficially own
the shares of Common Stock beneficially owned include 492,500 vested optionsby Newcastle Partners, L.P. In
addition, Newcastle Partners, L.P., Newcastle Management, L.P., Newcastle Group,
L.L.C., Mark Schwarz, Steven Pully, Ramon D. Phillips and options vesting within 60 daysRobert P. Page are
members of October 1, 2002.

(b) Voting rights for 3,239a Section 13(d) reporting group and may be deemed to beneficially own
shares of Common Stock owned by the other members of the broup. Newcastle
Partners, L.P. and Mr. Schwarz are held in customer or fiduciary
accounts in the ordinary courseonly members of business by Wells Fargo Bank Minnesota, N.A.,
an indirect wholly owned subsidiarythe group to directly own
shares of Wells Fargo & Company.Common Stock.

(c) Includes vested options and options vesting within 60 days of October 1,
2002November
15, 2003 under the Company's stock option plans, as follows: 492,500242,500 shares for
Mr. Parker; 22,650 shares for Mr. Phillips; 12,500 shares for Mr. Powell; 10,000 shares for Mr. Taylor; 6,783 shares for Mr. Ungerman; 106,500
shares for Mr. Clark; 76,500 shares for Mr. Olgreen; and 44,500 shares for Mr.
Preator.

(d) Includes 12,283 shares for which Mr. Ungerman shares voting and
investment power with his wife.

(e) Includes 18,200 shares for which Mr. Clairday shares voting and
investment power for 18,200 shares with his wife.

(f) Mr. Phillips shares voting and investment power for 5,333 shares with
the other shareholders of Wholesale Software International, Inc.

(g) Includes 4,000 shares held by K&A Clark Family Partnership, L.P.

(h)(g) Excludes vested options, options vesting within 60 days of October 1,
2002, and shares owned by Mr. Rogers who was a Director and an executive
officer until August 21, 2002.

The Company has been advised that Mr. Rogers has pledged 2,905,000 shares
(approximately 28.8% of the issued and outstanding shares of common stock) to
Wells Fargo Bank (Texas), N.A., an indirect wholly owned subsidiary of Wells
Fargo & Company ("Wells Fargo Bank"), pursuant to a Pledge Agreement dated June
2, 1997, as amended, executed by Mr. Rogers in favor of Wells Fargo Bank. The
pledge secures a $9,500,000 loan made by Wells Fargo Bank to Mr. Rogers. The
Company is further advised that the loan is currently in default. On September
30, 2002 Wells Fargo Bank notified the Company of its determination to exercise
its right to control voting rights with respect to the shares. On October 2,
2002, Wells Fargo Bank notified the Company of its determination to exercise its
rights to control the disposition of the shares pursuant to a notification of
disposition of collateral under Article 9 of the Uniform Commercial Code.

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Board currently consists of seven authorized directors and one
non-voting advisory director as described in "Proposal One: Election of
Directors" on page 2.5.

The Board has established Audit, Compensation, Executive, Finance, Nominating
and Governance, and Stock Award Plan Committees. The Company does not have a Nominating Committee. The Audit Committee selects
independent auditors and reviews audit results. The Compensation Committee
reviews and approves remuneration for officers of the Company. The Finance
Committee reviews and oversees the Company's capital structure and operating
results. The Executive Committee considers business as directed by the Chairman
of the Board. The Nominating and Governance Committee considers recommendations
for and qualifications of nominees for Director, and provides senior management
guidance in matters of the Company's governance. The Nominating and
Governance Committee will consider nominees recommended by shareholders. See
"Shareholder Proposals" for the procedures required to be followed in submitting
such recommendations. The Stock Award Plan Committee administers the 1993 Stock
Award Plan and the 1993 Outside Directors Stock Award Plan.

As of October 1, 2002,November 15, 2003, Messrs. Phillips,Taylor, Powell, Taylor,Pully, and Ungerman serve
on the Audit Committee; Messrs. Powell, Taylor, and Ungerman serve on the
Compensation Committee; Messrs. Powell, Ungerman,Clairday and ClairdayPowell serve on the Stock Award
Plan Committee; Messrs. Phillips,Ungerman, Parker, and UngermanSchwarz serve on the Executive
Committee; and Messrs. Schwarz, Parker, Phillips, Powell, and Taylor, serve on the Finance
Committee; and Messrs. Taylor and Powell serve on the Nominating and Governance
Committee.

During fiscal year 2002,2003, the Board of Directors held four meetings. The Audit
Committee met twofour times, the Compensation Committee met once,three times, the
Executive Committee met tentwelve times, and the Finance Committee met threefour times.
In addition, the Board of Directors and the Compensation and Stock Award Plan
Committees took several actions by unanimous written consent in lieu of
meetings. Each of the directors attended at least three-fourths of the total
number of meetings held by the Board and the committees on which he served.

COMPENSATION OF DIRECTORS

A director who is an employee of the Company is not compensated for service
as a member of the Board of Directors or any Committee of the Board. Outside
directors receive an annual fee of $17,000 plus meeting fees equal to $1,000 per
Board meeting and $250 per Committee meeting attended. The Chairman of the
Board receives an additional $6,000 annual fee for serving in that capacity.
Directors are also reimbursed for Board related expenses.

Under the 1993 Outside Directors Stock Award Plan each elected outside
director is eligible to receive, as of the first day of the Company's fiscal
year, options for Common Stock equal to twice the number of shares of Common
Stock purchased during the preceding fiscal year or purchases by exercise of
previously granted options during the first ten days of the current fiscal year.
On the first day of the first fiscal year immediately following the day on which
an outside director first becomes eligible to participate in this plan, that
outside director shall receive an option to acquire one share of Common Stock
for each share of Common Stock owned by such director on this first day of the
fiscal year. No outside director shall be entitled to options for more than
20,000 shares per fiscal year. Stock options granted under the plan have an
exercise price equal to the market price of the Common Stock on the date of
grant and are first exercisable one year after grant.

Since the beginning of fiscal year 2002,2003, stock options were granted to
outside directors pursuant to such plan as follows: on June 25, 2001July 1, 2002 options for
4,00010,000 shares were granted to Mr. Powell at an exercise price of $2.12$1.280 per
share.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board is responsible for providing independent
objective oversight of the Company's accounting functions and internal controls.
The Audit Committee is composed of four independent directors and acts under a
written charter adopted and approved by the Board of Directors on May 23, 2000.April 15,
2003. Each of the members of the Audit Committee is independent as defined by
the National Association of Securities Dealters'Dealers' listing standards. A copy of the
Audit Committee Charter has been previously filed. The Audit Committee is
currently reviewingstandards and revising its charter in light ofas
required by the Sarbanes-Oxley Act of 2002 ("Act"). After a full review and
other recent developments.analysis, the Board of Directors reaffirmed that each member of the Audit
Committee is independent within the meaning of Rule 4200(a)(14) of the National
Association of Securities Dealers' listing standards and the rules and
regulations of the Securities and Exchange Commission (the "SEC"), as such
requirements are defined as of the mailing date of this proxy statement. The
Board expects to adopt a revisedof Directors has also determined that at least one member of the Audit
Committee, charter inMr. Pully, is an "audit committee financial expert" (as defined by
SEC rules and regulations). For an overview of Mr. Pully's qualifications, see
the near future.section entitled "Biographies of Nominee Directors, Continuing Directors,
and Advisory Director" above.

The responsibilities of the Audit Committee include reviewing the financial
reports and other financial information provided by the Company to any
governmental body or the public; the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Company's auditing, accounting, and
financial reporting processes generally. Consistent with this function, the
Audit Committee encourages continuous improvement of, and adherence to, the
Company's policies, procedures, and practices at all levels.

The Audit
Committee's primary duties andCommittee has been established to: (a) assist the Board in its
oversight responsibilities are to:

- - serve as an independent and objective party to monitorregarding: (1) the integrity of the Company's
financial reporting processstatements, (2) the Company's compliance with legal and internal control system,

- - reviewregulatory
requirements, and appraise(3) the audit efforts ofindependent accountant's qualifications and
independence; (b) prepare the report required by the United States Securities
and Exchange Commission (the "SEC") for inclusion in the Company's annual proxy
statement; (c) retain and terminate the Company's independent accountants,accountant; (d)
approve audit and - - provide an open avenue of communication amongnon-audit services to be performed by the independent
accountants,
financialaccountant; and senior management, and(e) perform such other functions as the Board may from time to
time assign to the Committee. In performing its duties, the Committee shall
seek to maintain an effective working relationship with the Board, the
independent accountant, and management of Directors.the Company.

The Audit Committee reviewed and discussed the Company's audited financial
statements with management. The Audit Committee also discussed with the
independent accountants the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees). The Company's
independent accountants also provided to the Audit Committee the written
disclosures and the letter required by Independence Standards Board Standard No.
1 (Independence Discussions with Audit Committees), and the Audit Committee
discussed with the independent accountants that firm's independence.

The Audit Committee is responsible for recommending to the Board that the
Company's financial statements be included in the Company's annual report.
Based on the discussions with the independent accountants concerning the audit,
the financial statement review, and other such matters deemed relevant and
appropriate by the Audit Committee, the Audit Committee recommended to the Board
that the June 30, 200229, 2003 audited financial statements be included in the Company's
20022003 Annual Report on Form 10-K.

In accordance with the rules of the Securities and Exchange Commission, the
foregoing information, which is required by paragraphs (a) and (b)Item 7 of Regulation
S-K Item 306,Schedule 14A, shall not be
deemed to be "soliciting material", or to be "filed" with the Commission or
subject to the Commission's Regulation 14A, other than as provided in that Item,
or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically requests that the
information be treated as soliciting material or specifically incorporates it by
reference into a document filed under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended.

SUBMITTED BY THE AUDIT COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS

Dr. F. Jay Taylor, Chairman
Ramon D. PhillipsButler E. Powell
Steven J. Pully
Steve A. Ungerman

Butler Powell

SUMMARY COMPENSATION TABLE

The following table sets forth the annual compensation of the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company for the fiscal years ended June 29, 2003, June 30, 2002, and June
24, 2001 and June
25, 2000 (designated as years 2003, 2002, 2001, and 2000)2001).

Annual Compensation
-------------------------------
Long-Term
-------------------
Compensation
Awards
-----------------------------------
All
Securities Under-- Other
Name Other Annual lyingUnderlying Compensation
Compensation Options (d)
(and Principal Position) Year Salary ($) Bonus ($) Compensation ($) (a)(b) (# of shares)
- ------------------------ ----------------- --------------------- ------------- --------- ------------- ---------- --------------------- -------------
C. Jeffrey Rogers.Rogers . . . . . . 2003(a)$ 126,308 $ 0 $ 15,772 0 $ 422,000
(Former Chief . . . . . . . . 2002 $ 663,523 $ 361,000 $ 242,702 0 (Chief0
Executive Officer). . . . . . 2001 $ 619,424 $ 475,000 $ 263,233 62,500 Officer)0

Ronald W. Parker. . . . . . . . . 20002003 $ 590,144537,755 $ 550,000275,000 $ 262,882179,050 0 Ronald W. Parker0
(President and Chief) . . . . 2002 $ 507,885 $ 277,300 $ 265,835287,863 0 (President). 0
Executive Officer). . . . . . 2001 $ 473,892 $ 275,000 $ 203,945 62,500 2000 $ 445,379 $ 262,500 $ 210,584 0

B. Keith Clark (Senior(Senior. . . . 2003 $ 186,035 $ 53,325 $ 2,993 0 0
Vice President, Secretary,. . 2002 $ 161,884 $ 22,50042,500 $ 0 0 Vice President0
and General Counsel). . . . . 2001 $ 148,538 $ 22,000 $ 0 40,000 General Counsel)0

Ward T. Olgreen . . . . 2000. . . 2003 $ 129,615160,904 $ 17,00034,700 $ 3,769 0 5,000

Ward T. Olgreen. .0
(Senior Vice President. . . . 2002 $ 147,596 $ 24,25032,250 $ 0 0 (Senior Vice President0
of Franchise Operations and . 2001 $ 134,615 $ 17,250 $ 0 37,500 of0
Concept Development)

Shawn M. Preator. . . . . . . . 20002003 $ 119,250139,650 $ 8,00042,750 $ 3,042 0 2,500
Development)

Shawn M. Preator . . . .0
(Chief Financial Officer and. 2002 $ 107,923 $ 7,50021,000 $ 0 0 (Vice0
Vice President of . . . Distribution)2001 $ 92,737 $ 22,500 $ 0 36,000 Finance and Treasurer)0

Danny K. Meisenheimer . 2000. . . .2003 $ 75,15365,244 $ 5,00013,000 $ 0 5,0000 0
(Vice President of
Marketing) (c )

(a) Mr. Rogers was a Director and the Company's Chief Executive Officer
until August 21, 2002. SeeFigures shown are for the period July 1, 2002 through
August 21, 2002. For additional information, see "Severance Agreement".

(b) Includes: for Mr. Rogers, life insurance benefits (which includes the
payment of related taxes) of $86,489 in 2002 2001, and 2000,2001, supplemental retirement
benefits (which includes the payment of related taxes) of $43,860 in 2002 and
2001, and 2000,life and disability insurance benefits (which includes the payment of
related taxes) of $11,050 in 2003, and $43,860 in 2002 and 2001; for Mr. Parker,
in 2003 a $150,000 allowance for life and disability benefits, secondary medical
benefits, and supplemental retirement benefits, a car allowance of $17,330 in
2003, and life insurance benefits (which includes the payment of related taxes)
of $10,879 in 2003, and $77,546 in 2002 and 2001, supplemental retirement
benefits (which includes the payment of related taxes) of $43,860 in 2002 and
2001, and life and disability insurance benefits (which includes the payment of
related taxes) of $43,860 in 2002 2001, and 2000;2001; in 2003 a car allowance of $2,993
for Mr. Parker, lifeClark, $3,769 for Mr. Olgreen, and $3,042 for Mr. Preator.

(d) Amounts paid pursuant to Severance Agreement dated August 21, 2002, as
follows: severance payments of $195,000 and $120,000; $50,000 for continuing
insurance benefits (which includes the payment of related taxes) of
$77,546 in 2002coverage; $25,000 for executive recruiting services; and 2001, and $74,037 in 2000, supplemental retirement benefits
(which includes the payment of related taxes) of $43,860 in 2002, 2001, and
2000, and life and disability insurance benefits (which includes the payment of
related taxes) of $43,860 in 2002, 2001, and 2000.$32,000 for
legal expenses. For additional information, see "Severance Agreement".

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information regarding stock options
exercised during fiscal year 20022003 and unexercised stock options held at the end
of fiscal year 20022003 by the Chief Executive Officer and the other four most
highly compensated executive officers of the Company. The closing bid price for
the Company's Common Stock, as reported by the National Association of
Securities Dealers Automated Quotation System, was $1.28$2.15 on June 28, 2002,27, 2003, the
last trading day of the Company's fiscal year.

Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
Shares Fiscal Year End Fiscal Year
Acquired on Value Realized Exercisable/(Exercisable/ End (Exercisable/
Name Exercise (#) ($) Unexercisable)(#) Unexercisable)
- ----------------- ------------- -------------- ---------------- ---------------
C. Jeffrey Rogers (a) -- -- 492,500 (e) $ -0-
-0- (u) $ -0------------------ --------------

Ronald W. Parker -- -- 492,500242,500 (e) $ -0-
-0- (u) $ -0-

B. Keith Clark -- -- 106,500 (e) $ -0-4,500
-0- (u) $ -0-

Ward T. Olgreen -- -- 76,500 (e) $ -0-4,500
-0- (u) $ -0-

Shawn M. Preator -- -- 44,500 (e) $ 4,500
-0- (u) $ -0-

Danny K. Meisenheimer -- -- -0- (e) $ -0-
-0- (u) $ -0-

C. Jeffrey Rogers (a) -- -- -0- (e) $ -0-
-0- (u) $ -0-

(a) Mr. Rogers was a Director and the Company's Chief Executive Officer
until August 21, 2002. SeeFor additional information, see "Severance Agreement"
belowbelow.

(e) Denotes exercisable options.
(u) Denotes unexercisable options.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information regardingDuring fiscal year 2003 the Company did not grant any stock options granted
during fiscal year 2002, pursuant to the Company's 1993 Stock Award Plan, to the
Chief Executive Officer andor any of the other four most highly compensated
executive officers of the Company.

Individual Grants Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Term
- ----------------- -----------------------------
% of Total Options
Granted to Exercise
Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date 5% 10%
- ------ ------------- ----------------- -------------- ---------------------- --------- ---------- -- -------- ----

Ronald W. Parker 0 - $ - - $ - $-

B. Keith Clark 0 - $ - - $ - $-

Ward T. Olgreen 0 - $ - - $ - $-

Shawn M. Preator 0 - $ - - $ - $-

Danny K. Meisenheimer 0 - $ - - $ - $-

C. Jeffrey Rogers -0-(a) 0 - $ - - $ - - -

Ronald W. Parker -0- - - - - -

B. Keith Clark -0- - - - - -

Ward T. Olgreen -0- - - - - -

Shawn M. Preator -0- - - - - -$-

(a) Mr. Rogers was a Director and the Company's Chief Executive
Officer until August 21, 2002. For additional information, see
"Severance Agreement" below.

COMPENSATION COMMITTEE AND STOCK AWARD PLAN COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors is comprised of three
independent, non-employee directors. The Compensation Committee is responsible
for establishing the level of compensation of the executive officers of the
Company. The Stock Award Plan Committee, which administers the 1993 Stock Award
Plan, is also composed of three independent, non-employee directors.

The Compensation Committee the Stock Award Plan Committee, and the Board expect
to amend the charters ofhave adopted a charter for the
Compensation Committee and the Stock Award Plan
Committee to the extent necessary to conform to the Committees'Committee's responsibilities to the
revised standards of Nasdaq, new rules adopted and to be adopted by the Securities and Exchange
Commission, and the provisions of the Sarbanes-Oxley Act of 2002.

In its administration and periodic review of executive compensation, the
Compensation Committee believes in aligning the interests of the executive
officers with those of the Company's shareholders. To accomplish this, the
Compensation Committee seeks to structure and maintain a compensation program
that is directly and materially linked to operating performance and enhancement
of shareholder value.

The Company intends for all compensation paid to its executives to be fully
deductible under federal income tax laws. Recently adopted changes to theThe Internal Revenue Code imposeimposes
certain limitations on compensation in excess of $1 million per year paid to
executives. The Compensation Committee believes that performance based bonuses
and stock options granted to its executive officers will continue to be fully
deductible.

CHIEF EXECUTIVE OFFICER

The salary and bonus of C. Jeffrey Rogers,Ronald W. Parker, Chief Executive Officer of the Company
throughfrom August 21, 2002, is set forth in his most recent Employment
Agreement, effective as of July 1, 1999, as amended on April 20, 2001.determined by the Compensation Committee.

In reviewing Mr. Rogers'Parker's agreement, the Compensation Committee found his
base salary and bonuscompensation terms to be in line with compensation packages of chief executive
officers at similar companies. The bonus program established in Mr. Rogers'Parker's
agreement was based on the Company meeting specified targets forperformance related to revenue, net income, new
store openings, pre-tax net income growth,store sales, for the distribution division,
the ratio of generalCompany stock price, store closings, and administrative expenses to total revenue, and pre-tax
operating cash flow.Company
expenses. Termination provisions were found to be industry competitive and in
line with historical performance and expected future contributions, as well as helpingand help to
ensure his continued leadership. See the
section entitled "Executive Employment
Contracts".

FORMER CHIEF EXECUTIVE OFFICER

The salary and bonus of C. Jeffrey Rogers, Chief Executive Officer of the
Company through August 21, 2002, was paid pursuant to his most recent Employment
Agreement, effective as of July 1, 1999, as amended on April 20, 2001.

EXECUTIVE OFFICERS

Salaries of the executive officers, excluding Mr. Rogers,Parker, are reviewed
annually and adjusted based on competitive practices, changes in level of
responsibilities and, in certain cases, individual performance measured against
goals. The Compensation Committee strongly believes that maintaining a
competitive salary structure is in the best interest of shareholders. It
believes the Company's long-term success in its marketplace is best achieved
through recruitment and retention of high caliber executives who are among the
mosthighly
skilled and talented in the industry.

Bonus targets for the four most highly paid executive officers, other than
the Chief Executive Officer, are set annually. Mr. Parker's 2002 bonus was
based on individual performance and targets related to the Company's
profitability, cash flow and debt repayments. The 20022003 bonuses for Mr. Clark,
Mr. Olgreen, Mr. Preator, and Mr. PreatorMeisenheimer were based on individual
performance, the performance of departments within their responsibility, and
targetscertain goals related to operating profitability of the Company operations for the fiscal year.

STOCK OPTIONS

The Compensation Committee and Stock Award Plan Committee believe that
equity ownership motivates officers and employees to provide effective
leadership that contributes to the Company's long-term financial success as
measured by appreciation in its stock price.

The Company established the 1993 Stock Award Plan for the purpose of
aligning employee and shareholder interests. Under this plan, stock options are
granted from time to time to certain executive officers, as well as other
employees, based upon their relative positions and responsibilities, as well as
historical and expected contributions to Company growth. During fiscal year
2003, the Company did not grant stock options to employees.

Submitted by the:

COMPENSATION COMMITTEE STOCK AWARD PLAN COMMITTEE

F. Jay TaylorButler E. Powell, Chairman Bobby L. Clairday, Steve A. Ungerman Butler E. PowellChairman
F. Jay Taylor Butler E. Powell
Steve A. Ungerman

EXECUTIVE EMPLOYMENT CONTRACTS

C. Jeffrey Rogers and the Company entered into an Employment Agreement,
executed October 1, 1999 and effective as of July 1, 1999, and an Amendment to
the Employment Agreement executed April 20, 2001, for a term to extend through
June 30, 2004. Mr. Rogers' employment agreement terminated upon his resignation
from the Company on August 21, 2002. Certain benefits and payments to Mr.
Rogers' provided for in the agreement ceased at that time. See the section below
entitled "Severance Agreement".

Ronald W. Parker, and the Company entered into an Employment Agreement,
executed October 1, 1999 and effective as of July 1, 1999, for a term that
currently extends through June 30, 2004. The agreement provides that Mr.
Parker's compensation will be determined each year by the Compensation
Committee.

B. Keith Clark, and Ward T. Olgreen and Shawn M. Preator each
entered into an Employment Agreement with the Company on October 17, 2001, with each such agreement havingDecember 16, 2002 which
contained the following provisions: (i) a term that currently extends through
December 31, 2002. Each of2007 for Mr. Parker and December 31, 2005 for Messrs. Clark,
Olgreen and Preator; (ii) the agreements
provides that therespective executive's compensation will be
determined each year by the Compensation Committee.Committee; (iii) each executive may be
terminated with or without cause, with cause including, but not limited to,
breach of monetary obligation to the Company, violation of the employment
agreement, fraud against the Company and failure to substantially perform
required duties, each as described in such agreement; (iv) each executive shall
receive an annual salary not less than his current salary and a bonus for Mr.
Parker of not less than fifty percent of his annual salary based on Company
performance related to revenue, net income, new store openings, store sales,
Company stock price, store closings, and Company expenses, and a bonus for each
of Messrs. Clark, Olgreen and Preator of not less than twenty percent of their
respective annual salary based on individual performance, the performance of
departments within their responsibility, and certain goals related to Company
operations for the fiscal year; (v) each executive is bound by obligations to
the Company related to the protection of the Company's trade secrets and
confidential information; and (vi) each executive is bound to arbitrate disputes
related to their employment agreement.

Mr. Parker, Mr. Clark, Mr. Olgreen, or Mr. OlgreenPreator may terminate their
respective agreements at any time within six12 months after a "change inof control" of the
Company occurs or within twelve months under certain circumstances after a
change in control
of the Company occurs. Change inof control is defined as: (a) a transfer of
substantially all of the assets of the Company to any person, group or entity
other than a person, group or entity that is controlled by the executive; (b)
the Company is merged with or into another corporation and the stockholdersshareholders of
the Company prior to such merger own less than 50% of the voting stock of the
Company or other surviving corporation after the merger; (c) an unapproved
change in the majority of the Company's Board of Directors; or (d) a person,
entity or group (other than (i) the Company or (ii) an employee benefit plan
sponsored by the Company) acquires 50% or more of the voting stock of the
Company. If the Company terminates Mr. Parker's employment without cause, or if
Mr. Parker terminates his employment upon a "change inof control," he will be
entitled to a lump sum payment equal to threefour times (i) his highest annual salary
over the last three years plus (ii) the highest bonus and other cash
compensation received by Mr. Parker during the last three years. If the Company
terminates Mr. Clark's, Mr. Olgreen's, or Mr. Preator's employment without
cause, or if Mr. Clark, Mr. Olgreen, or Mr. Preator terminates his employment
upon a "change of control", he will be entitled to a lump sum payment equal to
two and one-half times the base amount of his annual compensation, as calculated
according to Section 280G of the Internal Revenue Code. If the Company
terminatesIn addition, Mr.
Olgreen's employment without cause, or ifParker, Mr. Clark, Mr. Olgreen terminates
his employment upon a "change of control", he willand Mr. Parker would be entitled to an additional
"tax gross-up" payment as a lump sumresult of any excise tax that such person is
required to pay as a result of such payment equalbeing deemed to two times the base amount of his annual compensation, as
calculated according to Section 280G ofbe an "excess
parachute payment" under the Internal Revenue Code. Each agreement includes a
noncompetition covenant that would apply for a stated number of years after
termination of employment. The number of years for the non-competition covenant
is threeequal to the number of years by which the respective executive's compensation
is multiplied pursuant to any severance payments made to such executive. See
"The Proxy Contest" for additional information with respect to the potential
effects of the election at the Annual Meeting of Newcastle's nominees to the
Board of Directors.

C. Jeffrey Rogers and the Company entered into an Employment Agreement,
executed October 1, 1999 and effective as of July 1, 1999, and an Amendment to
the Employment Agreement executed April 20, 2001, for a term to extend through
June 30, 2004. Mr. ParkerRogers' employment agreement terminated upon his resignation
from the Company on August 21, 2002. Certain benefits and two yearspayments to Mr.
Rogers' provided for Mr.
Clark and Mr. Olgreen.in the agreement ceased at that time. See the section below
entitled "Severance Agreement".

SEVERANCE AGREEMENT

On August 21, 2002, Mr. Rogers and the Company entered into a Severance
Agreement and Release (the "Severance Agreement") in connection with Mr. Rogers'
resignation of thishis position as a Director and Chief Executive Officer of the
Company. Pursuant to the terms of the Severance Agreement, Mr. Rogers agreed,
among other things, to (1) resign from all positions with the Company and its
affiliates, (2) generally release the Company from potential claims that he
might have against the Company, (2)including any claims for severance payment under
his employment agreement, (3) not disclose the Company's confidential
information, and (3) repay(4) enter into a bonus of approximately $120,000 that
was paidcovenant not to him in error.sue the Company, its
affiliates, officers, or employees. In return, the Company agreed to pay Mr.
Rogers approximately $446,000,$415,000, consisting of accrued vacation, severance pay,
life insurance premiums, executive recruiting assistance, and legal fees, plus
the amount of any unpaid salary through August 21, 2002.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On October 6, 1999, the Company loaned C. Jeffrey Rogers, the Company's Chief
Executive Officer, approximately $1.95 million to acquire 700,000 shares of the
Company's Common Stock through the exercise of vested stock options previously
granted to him by the Company. The interest rate on the loan iswas the same
floating interest rate the Company pays on its credit facility with Wells Fargo
(Texas), N. A. ("Wells Fargo"). As collateral for the loan, Mr. Rogers granted
the Company a second lien on 2,749,000 shares of the Company's Common Stock and
certain real property. The Company has agreed to subordinate its loan to an
existing personal loan made by Wells Fargo to Mr. Rogers. The Wells Fargo loan
iswas secured by a first lien on the collateral pledged to the Company. The
principal amount outstanding at all times during the fiscal year 2002 was
approximately $1,949,000. In August 2002, the Board, based upon a review of
certain financial information provided by Mr. Rogers, determined that the
collection of the promissory note iswas doubtful. The Company recorded thea charge in
the fourth quarter of fiscal 2002 to fully reserve for the possible nonpayment.
On August 21, 2002, Mr. Rogers resigned from the Company. On December 9, 2002,
Mr. Rogers repaid the loan to the Company, including all accrued interest
expense and related costs. The Company intends, toreversed the extent legally permissible, to enforce
this obligation underpre-tax reserve in the
relevant termssecond quarter of the promissory note and pledge
agreement.fiscal 2003.

On October 6, 1999, the Company loaned Ronald W. Parker, the Company's President
and Chief Operating Officer, approximately $560,000$557,000 to acquire 200,000 shares of
the Company's Common Stock through the exercise of vested stock options
previously granted to him by the Company. On July 7, 2000, the Company loaned
Mr. Parker approximately $302,000 to acquire an additional 200,000 shares of the
Company's Common Stock through the exercise of vested stock options previously
granted to him by the Company. The interest rate on the loans is the same
floating interest rate the Company pays on its credit facility with Wells Fargo.
As collateral for the loans, Mr. Parker granted the Company (i) a first lien on
100,000 previously purchased shares of the Company's Common Stock and certain
real property, and (ii) a second lien in certain additional real property. After
the July 7 loan, the principal amount outstanding was $862,000.
On October 30, 2000,$859,000. Mr. Parker paid
the Company approximately $165,000$170,000 of the principal amount, of the loans, leaving a current
principal loan balance at fiscal year end of approximately $696,000.$689,000. All amounts
are due and payable on each loan on June 30, 2004.

The Board of Directors approved each loan, with the specific terms and
collateral being approved by the Compensation Committee.

Bobby L. Clairday is President and sole shareholder of Clairday Food
Services, Inc. and is sole shareholder of Advance Food Services, Inc., both of
which are franchisees of the Company. Mr. Clairday also holds area development
rights in his own name. Mr. Clairday currently operates 12 restaurants in
Arkansas, either individually or through the corporations noted above. As
franchisees, the two corporations purchase a majority of their food and other
supplies from the Company's distribution division. In fiscal year 2002,2003,
purchases by these franchisees made up 5.57%6% of the Company's food and supply
sales, and royalties, license fees, and area development fees from Mr. Clairday
and such franchisees made up 3.38%4% of the Company's franchise revenues.

SHAREHOLDER PROPOSALS
REPEAL OF BYLAW AMENDMENTS AND REIMBURSEMENT OF EXPENSES

On October 27, 2003, the Company received a notice from Newcastle that it
intends to solicit the consent of shareholders at the Annual Meeting through a
proxy statement to repeal certain of the amendments to the Company's bylaws
adopted by the Board of Directors of the Company on December 18, 2002 (the
"Bylaw Amendments") and to seek approval to have all of its expenses incurred in
connection with any proxy or other solicitation materials reimbursed by the
Company. On November 7, 2003, the Company received a subsequent letter from
Newcastle advising the Company that the specific shareholder proposals that it
intends to present at the Annual Meeting are as follows:

- - the adoption of a resolution repealing the amendment to Article III,
Section 7, new Article III, Section 13 and new Article IV, Section 6 of the
Amended and Restated Bylaws of Pizza Inn adopted by the Pizza Inn Board on
December 18, 2002; and
- - the adoption of a resolution recommending to the Pizza Inn Board that
Pizza Inn reimburse Newcastle for all expenses (including any litigation
expenses) it incurs in connection with its solicitation of proxies for the
Annual Meeting.

REPEAL OF BYLAW AMENDMENTS

The amendments to the Company's bylaws that Newcastle seeks to repeal are
discussed below.

Article III, Section 7 (which deals with who is authorized to call a special
meeting of shareholders) was amended to delete the ability of shareholders
owning at least one-third (1/3) in amount of the entire capital stock of the
Company issued and outstanding to call a special meeting.

Article III, Section 13 (which requires shareholders to provide advance notice
to the Company of matters that shareholders wish to raise at shareholder
meetings) was added to the Bylaws. The full text of Article III, Section 13 is
as follows:

SECTION 13. BUSINESS AT SHAREHOLDERS' MEETING. At any meeting of the
shareholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before a meeting, business
must be (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors, (b) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (c)
otherwise properly brought before the meeting by a shareholder. For business to
be properly brought before a meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a shareholder's notice shall be delivered to or mailed and received
at the principal executive offices of the Corporation not less than fifty (50)
days nor more than seventy-five (75) days prior to the meeting; provided,
however, that in the event that less than sixty-five (65) days notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received no later than the
close of business on the fifteenth (15th) day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made,
whichever first occurs. Such shareholder's notice to the Secretary shall set
forth (a) as to each matter the shareholder proposes to bring before the
meeting, a brief description of business desired to be brought before the
meeting and the reasons for conducting such business at the meeting, and (b) as
to the shareholder giving the notice (i) the name and record address of the
shareholder, (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the shareholder and (iii) any
material interest of the shareholder in such business. No business shall be
conducted at a meeting of the shareholders unless proposed in accordance with
the procedures set forth herein. The Chairman of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the foregoing procedure and such
business shall not be transacted. To the extent this Section 13 shall be deemed
by the Board of Directors or the Securities and Exchange Commission, or finally
adjudged by a court of competent jurisdiction, to be inconsistent with the right
of shareholders to request inclusion of a proposal in the Corporation's proxy
statement pursuant to Rule 14a-8 promulgated under the Securities Exchange Act
of 1934, as amended, such rule shall prevail.

Article IV, Section 6 (which requires shareholders to provide advance
notice to the Company of individuals that shareholders desire to nominate for
election to the Board of Directors at a meeting of the shareholders called for
the purpose of electing directors) was also added to the bylaws. The full text
of Article IV, Section 6 is as follows:

SECTION 6. NOMINATIONS TO BOARD OF DIRECTORS. Nominations of persons for
election to the Board of Directors of the Corporation at a meeting of the
shareholders may be made by or at the direction of the Board of Directors or may
be made at a meeting of shareholders by any shareholder of the Corporation who
is entitled to vote for the election of Directors at the meeting in compliance
with the notice procedures set forth in this Section 6 of Article IV. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a shareholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than fifty (50) days nor more than seventy-five (75) days prior to the
meeting; provided, however, that in the event that less than sixty-five (65)
days notice or prior public disclosure of the date of the meeting is given or
made no later than the close of business on the fifteenth (15th) day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made, whichever first occurs. Such shareholder's notice to
the Secretary shall set forth (a) as to each person whom the shareholder
proposes to nominate for election or re-election as a Director, (i) the name,
age, business address and residence address of the person, (ii) the principal
occupation or employment of the person, (iii) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the person and
(iv) any other information related to the person that is required to be
disclosed in solicitations for proxies for election of Directors pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended; and (b) as
to the shareholder giving the notice (i) the name and record address of the
shareholder and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the shareholder. The Corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the Corporation to determine the eligibility of such proposed
nominee to serve as Director of the Corporation. No person shall be eligible for
election as a Director of the Corporation at a meeting of the shareholders
unless such person has been nominated in accordance with the procedures set
forth herein. If the facts warrant, the Chairman of the meeting shall determine
and declare to the meeting that a nomination does not satisfy the requirements
set forth in the preceding sentence and the defective nomination shall be
disregarded. Nothing in this Section 6 shall be construed to affect the
requirements for proxy statements of the Corporation under Regulation 14A of the
Exchange Act.

At the time the Board of Directors approved the Bylaw Amendments, it
determined that the amendments were in the best interests of the Company. The
Board of Directors continues to believe that the Bylaw Amendments are in the
best interest of the Company and therefore recommends that shareholders vote
AGAINST the repeal of the Bylaw Amendments.

The Bylaw Amendments established an advance notice procedure with regard to
the nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors (the "nomination procedure") and with
regard to certain matters to be brought before a meeting of shareholders (the
"business procedure"). If the chairman presiding at the meeting determines that
a person was not nominated in accordance with the nomination procedure, such
person will not be eligible for election as a director, or if the chairman
presiding determines that other business was not properly brought before such
meeting in accordance with the business procedure, such business will not be
conducted at such meeting. Nothing in the nomination procedure or the business
procedure preclude discussion by any shareholder of any nomination or business
properly made or brought before the annual meeting of shareholders in accordance
with the procedures specified in the bylaws.

By requiring advance notice of nominations by shareholders, the nomination
procedure affords the Board of Directors an opportunity to consider the
qualification of the proposed nominees and, to the extent deemed necessary or
desirable by the Board of Directors, to inform the shareholders about such
qualifications. By requiring advance notice of proposed business, the business
procedure provides the Board of Directors with an opportunity to inform
shareholders of any business proposed to be conducted at a meeting and the Board
of Directors' position on any such proposal, enabling shareholders to better
determine whether they desire to attend the meeting or grant a proxy to the
Board of Directors as to the disposition of such business. In addition, the
business procedure provides for a more orderly procedure for conducting the
annual meeting of shareholders. Although our bylaws do not give the Board of
Directors any power to approve or disapprove shareholder nominations for the
election of directors or any other business desired by shareholders to be
conducted at an annual meeting, our bylaws may have the effect of precluding a
nomination for the election of directors or of precluding any other business at
a particular annual meeting if the proper procedures are not followed.

The Bylaw Amendments also limited the calling of special meetings of
shareholders to the chief executive officer or a majority of the Board of
Directors. This amendment eliminated the ability of the holders of 1/3 of the
Company's outstanding stock from accelerating a meeting of shareholders in order
to bring a proposal for shareholder approval. The purpose of this amendment was
to prevent a significant shareholder or proxy contestant from forcing
shareholder consideration of a proposal before the Board has had an opportunity
to review the proposal.

The Bylaw Amendments may discourage or deter a third party from conducting
a solicitation of proxies to elect its own slate of directors or otherwise
attempting to obtain control of the Company, even if the conduct of such
business or such attempt might be beneficial to the Company and its
shareholders. The existence of anti-takeover provisions (whether the intention
of these provisions is to effect an anti-takeover plan or whether the
anti-takeover effect is merely incidental) has disadvantages and advantages to
the shareholders. On the one hand, the existence of anti-takeover provisions may
tend to lower the market price of the Company's Common Stock because the Company
may be less attractive to third parties who would otherwise be interested in
accumulating stock in a takeover attempt, but are discouraged from doing so
because of the anti-takeover provisions. Anti-takeover provisions may also
result in an issuer's management becoming entrenched and not readily susceptible
to changes in management sought by the shareholders. On the other hand, the
existence of anti-takeover provisions may be helpful to the Company and the
shareholders because they might make the Company less vulnerable to a takeover
of the Company at a time when the market price of the Common Stock is low
relative to the perceived value of the Company, and the existence of
anti-takeover provisions might insulate the Company's management from pressure
to enter into transactions or take other actions that might not be in the best
interest of the shareholders.

EXPENSE REIMBURSEMENT

Because the Board of Directors believes that the repeal of the Bylaw Amendments
would not be in the best interest of the Company, the Board of Directors does
not believe that the Company should reimburse Newcastle for the expenses
(including any litigation expenses) incurred by it in connection with any proxy
or other solicitation materials seeking the repeal of the Bylaw Amendments.

RECOMMENDATION OF BOARD OF DIRECTORS

IF NEWCASTLE PRESENTS ITS PROPOSALS TO REPEAL THE BYLAW AMENDMENTS AT THE
ANNUAL MEETING AND/OR TO SEEK REIMBURSEMENT OF ITS PROXY SOLICITATION EXPENSES,
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" THESE
PROPOSALS.

INDEPENDENT AUDITORS

TheFor the Company's fiscal year beginning June 30, 2003, the Audit Committee
has selected PricewaterhouseCoopersBDO Seidman LLP certified public accountants as the independent
auditors of the Company for fiscal year 2003.2004. A representative of PricewaterhouseCoopersBDO Seidman
LLP will be present at the Annual Meeting, will be available to respond to
appropriate questions, and will have an opportunity to make a statement.

For fiscal 2004, BDO Seidman replaces PricewaterhouseCoopers LLP, which was the
Company's independent auditor for the fiscal year ending June 29, 2003. The
Company does not anticipate that a representative of PricewaterhouseCoopers will
be present at the Annual Meeting, nor does it anticipate that a representative
will be available to make a statement or to answer questions. The decision to
change accountants was made by vote of the Board's Audit Committee, and the
dismissal of PricewaterhouseCoopers became effective on October 8, 2003. During
fiscal years 2002 and 2003, there were no disagreements between the Company's
senior management and PricewaterhouseCoopers' senior audit personnel on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure such that would have caused PricewaterhouseCoopers
to have made reference to the subject matter of such disagreements in connection
with its audit report.

AUDIT FEES. The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the audit of the Company's annual financial
statements for the year ended June 30, 200229, 2003 and the reviews of the financial
statements included in the Company's Forms 10-Q for that year were $93,126.$129,540.

FINANCIAL INFORMATION SYSTEM DESIGN AND IMPLEMENTATION FEES. During fiscal year
2002,2003, PricewaterhouseCoopers LLP did not bill the Company for any professional
services for financial information systems design and implementation.

ALL OTHER FEES. All other fees billed by PricewaterhouseCoopers LLP for fiscal
year 20022003 totaled $41,303,$62,580, including audit-related services of $14,455$13,656 and
non-audit services of $26,848.$48,924. Non-audit services generally include fees for cost segregation analysis,a
change in tax accounting method, tax return preparation, foreign tax analysis
and calculation, and review of the Company's Franchise Offering Circular.

In considering and authorizing these payments to PricewaterhouseCoopers LLP for
services unrelated to performance of the audit of the Company's financial
statements, the Audit Committee has determined that the cost segregation
analysischange in tax accounting
method services, tax return preparation, foreign tax analysis and calculation,
and review of the Company's franchise offering circular undertaken by
PricewaterhouseCoopers LLP are not inconsistent with its performance of the
audit and financial statement review functions and are compatible with
maintaining its independence.

SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 ("Act") requires the
Company's executive officers and directors and the persons who own more than ten
percent of the Company's Common Stock to file initial reports of ownership of
Common Stock and reports of changes of ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc. and
to furnish the Company with copies of such reports. The Company believes that,
during the preceding fiscal year, all of the Company's executive officers,
directors, and holders of more than 10% of its Common Stock timely filed all
reports required by Section 16(a) of the Exchange Act.

SHAREHOLDER PROPOSALS
FOR THE 2004 ANNUAL MEETING

If a shareholder wishes to present a proposal at the Annual Meeting of
Shareholders tentatively scheduled for January 25, 2005, the shareholder must
deliver his or her proposal to the Company at its principal executive offices no
later than August 5, 2004, in such form as required under rules issued by the
Securities and Exchange Commission, in order to have that proposal included in
the proxy materials of the Company for such Annual Meeting of Shareholders.

Unless the Company's advance notice bylaw provision is repealed at the Annual
Meeting, if a shareholder intends to submit a matter for consideration at next
year's meeting, other than by submitting a proposal to be included in the
Company's proxy statement, the shareholder must give timely notice according to
the Company's bylaws. Those bylaws provide that, to be timely, a shareholder's
notice must be received by the Company's Corporate Secretary at 3551 Plano
Parkway, The Colony, Texas 75056, not less than 50 days nor more than 75 days
prior to the meeting. However, if less than 65 days notice or prior public
disclosure of the date of the meeting is given or made to shareholders, the
shareholders must deliver notice to the Company no later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made, whichever first
occurs. For each matter the shareholder intends to bring before the meeting, the
notice must specify: (a) the name and address of the shareholder as they appear
on the books of the Company; (b) the class and number of shares of the Company's
stock that are beneficially owned by the shareholder; (c) any material interest
of the shareholder in the proposed business described in the notice; (d) if such
business is a nomination for director, each nomination sought to be made,
together with the reasons for each nomination, a description of the
qualifications and business or professional experience of each proposed nominee
and a statement signed by each nominee indicating his or her willingness to
serve if elected, and disclosing the information about him or her that is
required by the Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder to be disclosed in
the proxy materials for the meeting involved if he or she were a nominee of the
Company for election as one of its directors; (e) if such business is other than
a nomination for director, the nature of the business, the reasons why it is
sought to be raised and submitted for a vote of the shareholders and if and why
it is deemed by the shareholder to be beneficial to the Company; and (f) if so
requested by the Company, all other information that would be required to be
filed with the Securities and Exchange Commission (the "SEC") if, with respect
to the business proposed to be brought before the meeting, the person proposing
such business was a participant in a solicitation subject to Section 14 of the
Exchange Act.
STOCK PERFORMANCE GRAPH

The following graph compares the cumulative annual total shareholder return
(change in share price plus reinvestment of any dividends) on the Company's
Common Stock versus two indexes for the past five fiscal years. The graph
assumes $100 was invested on the last trading day of the fiscal year ending June
29, 1997.28, 1998. Prior to the first quarter of fiscal year 1998 and subsequent to the
second quarter of fiscal year 2001, the Company did not pay cash dividends on
its Common Stock during the applicable period. The Dow Jones Equity Market
Index is a published broad equity market index. The Dow Jones Entertainment and
Leisure Restaurant Index is compiled by Dow Jones and Company, Inc., and is
comprised of seven public companies, weighted for the market capitalization of
each company, engaged in restaurant or related businesses (CKE Restaurants,
Inc., Brinker International, Inc., Cracker Barrel Old Country Store, Inc.,
Darden Restaurants, Inc., McDonald's Corporation, Tricon Global Restaurants,
Inc., and Wendy's International, Inc.).

PIZZA INN INC NEW

Cumulative Total Return
6/29/1997
6/28/1998 6/27/1999 6/25/2000 6/24/2001 6/30/2002 6/29/2003

PIZZA INN, INC..INC. . . . . . 100.00 144.73 101.20 109.20 70.16 41.3969.93 75.45 48.48 28.60 48.03
DOW JONES US TOTAL MARKET 100.00 128.24 148.74 168.12 143.54 118.19115.99 131.10 111.93 92.17 93.20
DOW JONES US RESTAURANTS. 100.00 128.94 143.66 113.58 116.49 138.17111.42 88.09 90.35 107.16 96.08

COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 ("Act") requires the
Company's executive officers and directors and the persons who own more than ten
percent of the Company's Common Stock to file initial reports of ownership of
Common Stock and reports of changes of ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc. and
to furnish the Company with copies of such reports. The Company believes that,
during the preceding fiscal year, all of the Company's executive officers,
directors and holders of more than 10% of its Common Stock timely filed all
reports required by Section 16(a) of the Act.

SHAREHOLDER PROPOSALS

If a shareholder wishes to present a proposal at the Annual Meeting of
Shareholders tentatively scheduled for December 18, 2003, the shareholder must
deliver his or her proposal to the Company at its principal executive offices no
later than July 8, 2003, in such form as required under rules issued by the
Securities and Exchange Commission, in order to have that proposal included in
the proxy materials of the Company for such Annual Meeting of Shareholders.

If a shareholder wishes to present a proposal at the 2003 Annual Meeting of
Shareholders, but does not wish to include the proposal in the proxy materials
of the Company for such Annual Meeting of Shareholders, the shareholder must
notify the Company in writing of his or her intent to make such presentation no
later than September 21, 2003 or the Company shall have the right to exercise
its discretionary voting authority when such proposal is presented at the Annual
Meeting of Shareholders, without including any discussion of that proposal in
the proxy materials for the Annual Meeting.

MISCELLANEOUS

The accompanying proxy is being solicited on behalf of the Board of Directors of
the Company. The expense of preparing, printing, and mailing the proxy and the
material used in the solicitation thereof will be borne by the Company. The
Company anticipates that its costs and expenses related to the solicitation of
proxies pursuant to this proxy statement will be approximately $35,000 more than
what the Company would normally spend for the solicitation of proxies in
connection with an annual meeting. In addition to the use of the mails, proxies
may be solicited by directors officers, and employeesofficers of the Company by personal interview,
telephone or telefax. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of stock held of record by such persons, and
the Company may reimburse them for reasonable out-of-pocket expenses of such
solicitation.

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K EXCLUDING EXHIBITS,
DATED SEPTEMBER 27, 2002,25, 2003, IS BEING FURNISHED TO SHAREHOLDERS WITH THIS PROXY
STATEMENT. COPIES OF SUCH EXHIBITS WILL BE FURNISHED UPON WRITTEN REQUEST AND
UPON REIMBURSEMENT OF THE COMPANY'S REASONABLE EXPENSES FOR FURNISHING SUCH
EXHIBITS. REQUESTS SHOULD BE ADDRESSED TO PIZZA INN, INC., 3551 PLANO PARKWAY,
THE COLONY, TEXAS 75056, ATTENTION: CORPORATE SECRETARY.

This Proxy, when properly executed, will be voted by the Proxies in the
manner designated below. If this Proxy is returned signed but without a clear
voting designation, the Proxies will vote FOR Item 1.

Please mark your
Votes as indicated
IN THIS EXAMPLE.
[ X ]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
Item 1. ELECTION OF CLASS I DIRECTORS.
Nominees: Bobby L. Clairday, Ronald W. Parker,
Ramon D. Phillips, Butler E. Powell
WITHHELD
FOR FOR ALL WITHHELD FOR: (Write that nominee's name in the space
[ ] [ ] provided below).

If you plan to attend the Annual
Meeting, please mark the WILL
ATTEND block.

WILL
ATTEND

Date: , 2002

Signature

Signature if held jointly

NOTE: Please sign as name appears hereon.
Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee, or guardian, please give
full title as such.

FOLD AND DETACH HERE

PROXY

(1) THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PIZZA INN, INC.

3551 PLANO PARKWAY
THE COLONY, TEXAS 75056

ANNUAL MEETING OF SHAREHOLDERS ON DECEMBER 18, 2002FEBRUARY 11, 2004

The undersigned, revoking all proxies heretofore given, hereby appoints B.
Keith Clark and Shawn M. Preator, and B. Keith Clark, or either of them, as proxies of the
undersigned, with full power of substitution and resubstitution, to vote on
behalf of the undersigned the shares of Pizza Inn, Inc. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Shareholders to be held
at 10:11:00 a.m., Dallas time, on Wednesday, December 18, 2002,February 11, 2004, at the Company's
corporate offices, 3551 Plano Parkway, The Colony, Texas 75056, and at all
adjournments thereof, as fully as the undersigned would be entitled to vote if
personally present, as specified on the reverse side of this card and on such
other matters as may properly come before the meeting or any adjournments
thereof. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on the reverse side)

ANNUAL MEETING OF SHAREHOLDERS OF
PIZZA INN, INC.
February 11, 2004

Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.

Please detach along the perforated line and mail in the envelope provided.

The Board of Directors recommends a vote FOR Item 1.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PELASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE.. [X]

1. ELECTION OF CLASS II DIRECTORS.
Nominees: [ }Steven J. Pully,
[ }F. Jay Taylor,
{ }Steve A. Ungerman

[ ] FOR ALL NOMINEES

[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES

[ ] FOR ALL EXCEPT
(see instructions below)

INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold as shown here [ X }

2. APPROVAL TO ADOPT RESOLUTIONS REPEALING THE FOLLOWING AMENDMENTS OF THE
AMENDED AND RESTATED BYLAWS OF THE COMPANY ADOPTED ON DECEMBER 18, 2002:

FOR AGAINST ABSTAIN
(i) Amendment to Article III, Section 7 that eliminates
the ability of shareholders to call a special meeting
of shareholders. [ ] [ ] [ ]
(ii) New Article III, Section 13 that requires
shareholders to comply with certain procedures
in order to bring business before a shareholder
meeting. [ ] [ ] [ ]
(iii)New Article IV, Section 6 that requires shareholders
to comply with certain procedures in order to
nominate directors. [ ] [ ] [ ]

3. REIMBURSEMENT OF NEWCASTLE PROXY SOLICATION EXPENSES [ ] [ ] [ ]

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 2 AND 3
IF THEY ARE PRESENTED AT THE ANNUAL MEETING

This Proxy, when properly executed, will be voted by the Proxies in the manner
designated below. If this Proxy is returned signed but without a clear voting
designation, the Proxies will vote FOR Item 1 and AGAINST Items 2 and 3.

Mark "X" here if you plan to attend the meeting. [ ]

To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.

Signature of Shareholder Date:

NOTE: Please sign exactly as your names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized officer,
giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.